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School Finance 101: On School Finance Equity & Money Matters: A Primer

Conceptions of Equity, Equal Opportunity and Adequacy

Reforms across the nation to state school finance systems have been focused on simultaneously achieving equal educational opportunity and educational adequacy. While achieving and maintaining educational adequacy requires a school finance system that consistently and equitably meets a certain level of educational outcomes, it is important to maintain equal education opportunity in those cases where the funding provided falls below adequacy thresholds. That is, whatever the outcome currently attained across the system, that outcome should be equally attainable regardless of where a child resides or attends school and regardless of his or her background.

Conceptions of school finance equity and adequacy have evolved over the years. Presently, the central assumption is that state finance systems should be designed to provide children, regardless of where they live and attend school, with equal opportunity to achieve some constitutionally adequate level of outcomes.[i]Much is embedded in this statement and it is helpful to unpack it, one layer at a time.

The main concerns of advocates, policymakers, academics and state courts from the 1960s through the 1980s were to a) reduce the overall variation in per-pupil spending across local public school districts; and b) disrupt the extent to which that spending variation was related to differences in taxable property wealth across districts. That is, the goal was to achieve more equal dollar inputs – or nominal spending equity – coupled with fiscal neutrality – or reducing the correlation between local school resources and local property wealth. While modern goals of providing equal opportunity and achieving educational adequacy are more complex and loftier than mere spending equity or fiscal neutrality, achieving the more basic goals remains relevant and still elusive in many states.

An alternative to nominal spending equity is to look at the real resources provided across children and school districts: the programs and services, staffing, materials, supplies and equipment, and educational facilities provided. (Still, the emphasis is on equal provision of these inputs.)[ii]Providing real resource equity may, in fact, require that per-pupil spending not be perfectly equal if, for example, resources such as similarly qualified teachers come at a higher price (competitive wage) in one region than in another. Real resource parity is more meaningful than mere dollar equity. Further, if one knows how the prices of real resources differ, one can better compare the value of the school dollar from one location to the next.

Modern conceptions of equal educational opportunity and educational adequacy shift emphasis away from schooling inputs and onto schooling outcomes and more specifically equal opportunity to achieve some level of educational outcomes. References to broad outcome standards in the school finance context often emanate from the seven standards[iii]articulated in Rose v. Council for Better Education,[iv]a school funding adequacy case in 1989 in Kentucky argued by scholars to be the turning point from equity toward adequacy in school finance legal theory.[v]There are two separable but often integrated goals here – equal opportunity and educational adequacy. The first goal is achieved where all students are provided the real resources to have equal opportunities to achieve some common level of educational outcomes. Because children come to school with varied backgrounds and needs, striving for common goals requires moving beyond mere equitable provision of real resources. For example, children with disabilities and children with limited English language proficiency may require specialized resources (personnel), programs, materials, supplies, and equipment. Schools and districts serving larger shares of these children may require substantively more funding to provide these resources. Further, where poverty is highly concentrated, smaller class sizes and other resource-intensive interventions may be required to strive for those outcomes commonly achieved by the state’s average child.

Meanwhile, conceptions of educational adequacy require that policymakers determine the desired level of outcome to be achieved. Essentially, adequacy conceptions attach a “level” of outcome expectation to the equal educational opportunity concept. Broad adequacy goals are often framed by judicial interpretation of state constitutions. It may well be that the outcomes achieved by the average child are deemed to be sufficient. But it may also be the case that the preferences of policymakers or a specific legal mandate are somewhat higher (or lower) than the outcomes achieved by the average child. The current buzz phrase is that schools should ensure that children are “college ready.”[vi]

One final distinction, pertaining to both equal educational opportunity and adequacy goals, is the distinction between striving to achieve equal or adequate outcomes versus providing the resources that yield equal opportunity for children, regardless of their backgrounds or where they live to achieve those outcomes. Achieving equal outcomes is statistically unlikely at best, and of suspect policy relevance, given that perfect equality of outcomes requires leveling down (actual outcomes) as much as leveling up. The goal of school finance policy in particular is to provide the resources to offset pre-existing inequalities in the likelihood that one child has greater chance of achieving the desired outcome levels than any other.

[i] Baker, B. D., Green, P. C. (2009) Conceptions, Measurement and Application of Educational Adequacy Standards. In D.N. Plank (Ed.) AERA Handbook on Education Policy. New York: Routledge.

Baker, B., & Green, P. (2014). Conceptions of equity and adequacy in school finance. Handbook of research in education finance and policy, 203-221.

Baker, B., & Green, P. (2008). Conceptions of equity and adequacy in school finance. Handbook of research in education finance and policy, 203-221

[ii] While often treated as a newer approach to equity analysis than measuring pure fiscal inputs, equity evaluations of real resources pre-date modern school finance equity, often being used for example to evaluate the uniformity of segregated black and white schools operating in the pre-Brown, “separate but equal” era.

Baker, B. D., & Green, P. C. (2009). Does increased state involvement in public schooling necessarily increase equality of educational opportunity? The Rising State: How State Power is Transforming Our Nation’s Schools, 133.

[iii] As per the court’s declaration: “an efficient system of education must have as its goal to provide each and every child with at least the seven following capacities: (i) sufficient oral and written communication skills to enable students to function in a complex and rapidly changing civilization; (ii) sufficient knowledge of economic, social, and political systems to enable the student to make informed choices; (iii) sufficient understanding of governmental processes to enable the student to understand the issues that affect his or her community, state, and nation; (iv) sufficient self-knowledge and knowledge of his or her mental and physical wellness; (v) sufficient grounding in the arts to enable each student to appreciate his or her cultural and historical heritage; (vi) sufficient training or preparation for advanced training in either academic or vocational fields so as to enable each child to choose and pursue life work intelligently; and (vii) sufficient levels of academic or vocational skills to enable public school students to compete favorably with their counterparts in surrounding states, in academics or in the job market.

Rose v. Council for Better Educ., Inc., 790 S.W.2d 186, 212(Ky. 1989).

[iv] Rose v. Council for Better Educ., Inc., 790 S.W.2d 186 (Ky. 1989).

[v] Clune, W. H. (1994). The shift from equity to adequacy in school finance. Educational Policy, 8(4), 376-394.


School Finance Reforms & Student Outcomes

There exists an increasing body of evidence that substantive and sustained state school finance reforms matter for improving both the level and distribution of short-term and long-run student outcomes. A few studies have attempted to tackle school finance reforms broadly applying multi-state analyses over time. Card and Payne (2002) found “evidence that equalization of spending levels leads to a narrowing of test score outcomes across family background groups.”[i](p. 49) Most recently, Jackson, Johnson & Persico (2015) evaluated long-term outcomes of children exposed to court-ordered school finance reforms, finding that “a 10 percent increase in per-pupil spending each year for all twelve years of public school leads to 0.27 more completed years of education, 7.25 percent higher wages, and a 3.67 percentage-point reduction in the annual incidence of adult poverty; effects are much more pronounced for children from low-income families.”(p. 1) [ii]

Numerous other researchers have explored the effects of specific state school finance reforms over time, applying a variety of statistical methods to evaluate how changes in the level and targeting of funding affect changes in outcomes achieved by students directly affected by those funding changes. Figlio (2004) explains that the influence of state school finance reforms on student outcomes is perhaps better measured within states over time, explaining that national studies of the type attempted by Card and Payne confront problems of a) the enormous diversity in the nature of state aid reform plans, and b) the paucity of national level student performance data.[iii]

Several such studies provide compelling evidence of the potential positive effects of school finance reforms. Studies of Michigan school finance reforms in the 1990s have shown positive effects on student performance in both the previously lowest spending districts, [iv]and previously lower performing districts. [v]Similarly, a study of Kansas school finance reforms in the 1990s, which also involved primarily a leveling up of low-spending districts, found that a 20 percent increase in spending was associated with a 5 percent increase in the likelihood of students going on to postsecondary education.[vi]

Three studies of Massachusetts school finance reforms from the 1990s find similar results. The first, by Thomas Downes and colleagues, found that the combination of funding and accountability reforms “has been successful in raising the achievement of students in the previously low-spending districts.”(p. 5)[vii]The second found that “increases in per-pupil spending led to significant increases in math, reading, science, and social studies test scores for 4th- and 8th-grade students.”[viii]The most recent of the three, published in 2014 in the Journal of Education Finance, found that “changes in the state education aid following the education reform resulted in significantly higher student performance.”(p. 297)[ix]Such findings have been replicated in other states, including Vermont. [x]

Indeed, the role of money in improving student outcomes is often contested. Baker (2012) explains the evolution of assertions regarding the unimportance of money for improving student outcomes, pointing out that these assertions emanate in part from misrepresentations of the work of Coleman and colleagues in the 1960s, which found that school factors seemed less associated with student outcome differences than did family factors. This was not to suggest, however, that school factors were entirely unimportant, and more recent re-analyses of the Coleman data using more advanced statistical techniques than available at the time clarify the relevance of schooling resources.[xi]

Hanushek (1986) ushered in the modern era “money doesn’t matter” argument, in a study in which he tallied studies reporting positive and negative correlations between spending measures and student outcome measures, proclaiming as his major finding:

“There appears to be no strong or systematic relationship between school expenditures and student performance.” (p. 1162)[xii]

Baker (2012) summarized re-analyses of the studies tallied by Hanushek, wherein authors applied quality standards to determine study inclusion, finding that more of the higher quality studies yielded positive findings with respect to the relationship between schooling resources and student outcomes.[xiii]While Hanushek’s above characterization continues to permeate policy discourse over school funding, often used as evidence that “money doesn’t matter,” it is critically important to understand that this statement is merely one of uncertainty about the direct correlation between spending measures and outcome measures, based on studies prior to 1986. Neither this statement, nor the crude tally behind it ever provided any basis for assuming with certainty that money doesn’t matter.

A separate body of literature challenges the assertion of positive influence of state school finance reforms in general and court ordered reforms in particular. Baker and Welner (2011) explain that much of this literature relies on anecdotal characterizations of lagging student outcome growth following court ordered infusions of new funding. Hanushek and Lindseth (2009) provide one example of this anecdote-driven approach in a book chapter which seeks to prove that court-ordered school funding reforms in New Jersey, Wyoming, Kentucky, and Massachusetts resulted in few or no measurable improvements. However, these conclusions are based on little more than a series of descriptive graphs of student achievement on the National Assessment of Educational Progress in 1992 and 2007 and an undocumented assertion that, during that period, each of the four states infused substantial additional funds into public education in response to judicial orders. That is, the authors merely assert that these states experienced large infusions of funding, focused on low income and minority students, within the time period identified. They necessarily assume that, in all other states which serve as a comparison basis, similar changes did not occur. Yet they validate neither assertion.

Baker and Welner (2011) explain that Hanushek and Lindseth failed to measure whether substantive changes had occurred to the level or distribution of school funding as well as when and for how long. In New Jersey, for example, infusion of funding occurred from 1998 to 2003 (or 2005), thus Hanushek and Lindseth’s window includes 6 years on the front end where little change occurred. Kentucky reforms had largely faded by the mid to late 1990s, yet Hanushek and Lindseth measure post reform effects in 2007. Further, in New Jersey, funding was infused into approximately 30 specific districts, but Hanushek and Lindseth explore overall changes to outcomes among low-income children and minorities using NAEP data, where some of these children attend the districts receiving additional support but many did not.[xiv]Finally, the authors concede that Massachusetts did, in fact experience substantive achievement gains, but attribute those gains to changes in accountability policies rather than funding.

In equally problematic analysis, Neymotin (2010) set out to show that court ordered infusions of funding in Kansas following Montoy v. Kansas led to no substantive improvements in student outcomes. However, Neymotin evaluated changes in school funding from 1997 to 2006, but the first additional funding infused following the January 2005 Supreme Court decision occurred in the 2005-06 school year, the end point of Neymotin’s outcome data.[xv]Finally, Greene and Trivitt (2008) present a study in which they claim to show that court ordered school finance reforms let to no substantive improvements in student outcomes. However, the authors test only whether the presence of a court order is associated with changes in outcomes, and never once measure whether substantive school finance reforms followed the court order, but still express the conclusion that court order funding increases had no effect.[xvi]

To summarize, there exist no methodologically competent analyses yielding convincing evidence that significant and sustained funding increases provide no educational benefits, and a relative few which do not show decisively positive effects.[xvii]On balance, it is safe to say that a sizeable and growing body of rigorous empirical literature validates that state school finance reforms can have substantive, positive effects on student outcomes, including reductions in outcome disparities or increases in overall outcome levels.[xviii]

Schooling Resources & Student Outcomes

The premise that money matters for improving school quality is grounded in the assumption that having more money provides schools and districts the opportunity to improve the qualities and quantities of real resources. The primary resources involved in the production of schooling outcomes are human resources – or quantities and qualities of teachers, administrators, support and other staff in schools. Quantities of school staff are reflected in pupil to teacher ratios and average class sizes. Reduction of class sizes or reductions of overall pupil to staff ratios require additional staff, thus additional money, assuming the wages and benefits for additional staff remain constant. Qualities of school staff depend in part on the compensation available to recruit and retain them – specifically salaries and benefits, in addition to working conditions. Notably, working conditions may be reflected in part through measures of workload, like average class sizes, as well as the composition of the student population.

A substantial body of literature has accumulated to validate the conclusion that both teachers’ overall wages and relative wages affect the quality of those who choose to enter the teaching profession, and whether they stay once they get in. For example, Murnane and Olson (1989) found that salaries affect the decision to enter teaching and the duration of the teaching career,[xix]while Figlio (1997, 2002) and Ferguson (1991) concluded that higher salaries are associated with more qualified teachers.[xx]Loeb and Page (2000) tackled the specific issues of relative pay noted above. They showed that:

“Once we adjust for labor market factors, we estimate that raising teacher wages by 10 percent reduces high school dropout rates by 3 percent to 4 percent. Our findings suggest that previous studies have failed to produce robust estimates because they lack adequate controls for non-wage aspects of teaching and market differences in alternative occupational opportunities.”[xxi]

In short, while salaries are not the only factor involved, they do affect the quality of the teaching workforce, which in turn affects student outcomes.

Research on the flip side of this issue – evaluating spending constraints or reductions – reveals the potential harm to teaching quality that flows from leveling down or reducing spending. For example, David Figlio and Kim Rueben (2001) note that, “Using data from the National Center for Education Statistics we find that tax limits systematically reduce the average quality of education majors, as well as new public school teachers in states that have passed these limits.”[xxii]

Salaries also play a potentially important role in improving the equity of student outcomes. While several studies show that higher salaries relative to labor market norms can draw higher quality candidates into teaching, the evidence also indicates that relative teacher salaries across schools and districts may influence the distribution of teaching quality. For example, Ondrich, Pas and Yinger (2008) “find that teachers in districts with higher salaries relative to non-teaching salaries in the same county are less likely to leave teaching and that a teacher is less likely to change districts when he or she teaches in a district near the top of the teacher salary distribution in that county.”[xxiii]

Others have argued that the dominant structure of teacher compensation which ties salary growth to years of experience and degrees obtained, despite weak correlations between those measures and student achievement gains, creates inefficiencies that negate the overall relationship between school spending and school quality. [xxiv]This argument is built on the assertion that existing funds could instead be used to compensate teachers according to (measures of) their effectiveness, while dismissing high cost “ineffective” teachers, replacing them with better ones with existing resources, thus achieving better outcomes with the same or less money.[xxv]

This argument depends on three assumptions. First, that adopting a pay-for-performance, rather than step-and-lane salary model would dramatically improve performance at the same or less expense. Second, that shedding the “bottom 5% of teachers” according to statistical estimates of their “effectiveness” can lead to dramatic improvements at equal or lower expense. Third and finally, both the incentive pay argument and deselecting the bottom 5% argument depend on sufficiently accurate and precise measures of teaching effectiveness, across settings and children.

Existing studies of pay for performance compensation models fail to provide empirical support for this argument – either that these alternatives can substantially boost outcomes, or that they can do so at equal or lower total salary expense.[xxvi]Simulations purporting to validate the long run benefits of deselecting “bad” teachers depend on the average pool of replacements lining up to take those jobs being substantively better than those who were let go (average replacing “bad”). Simulations promoting the benefits of “bad teacher” deselection assume this to be true, without empirical basis, and without consideration for potential labor market consequences of the deselection policy itself.[xxvii]Finally, existing measures of teacher “effectiveness” fall well short of these demands.[xxviii]

Most importantly, arguments about the structure of teacher compensation miss the bigger point – the average level of compensation matters with respect to the average quality of the teacher labor force. To whatever degree teacher pay matters in attracting good people into the profession and keeping them around, it’s less about how they are paid than how much. Furthermore, the average salaries of the teaching profession, with respect to other labor market opportunities, can substantively affect the quality of entrants to the teaching profession, applicants to preparation programs, and student outcomes. Diminishing resources for schools can constrain salaries and reduce the quality of the labor supply. Further, salary differentials between schools and districts might help to recruit or retain teachers in high need settings. In other words, resources used for teacher quality matter.

Ample research indicates that children in smaller classes achieve better outcomes, both academic and otherwise, and that class size reduction can be an effective strategy for closing racial or socio-economic achievement gaps. [xxix]While it’s certainly plausible that other uses of the same money might be equally or even more effective, there is little evidence to support this. For example, while we are quite confident that higher teacher salaries may lead to increases in the quality of applicants to the teaching profession and increases in student outcomes, we do not know whether the same money spent toward salary increases would achieve better or worse outcomes if it were spent toward class size reduction. Some have raised concerns that large scale-class size reductions can lead to unintended labor market consequences that offset some of the gains attributable to class size reduction (such as the inability to recruit enough fully qualified teachers). For example, studies of California’s statewide class size reduction initiative suggest that as districts across the socioeconomic spectrum reduced class sizes, fewer high quality teachers were available in high poverty settings.[xxx]

Many over time have argued the need for more precise cost/benefit analysis regarding the tradeoffs between applying funding to class size reduction versus increased compensation.[xxxi]Still, the preponderance of existing evidence suggests that the additional resources expended on class size reductions do result in positive effects. Both reductions to class sizes and improvements to competitive wages can yield improved outcomes, but the efficiency gains of choosing one strategy over the other are unclear, and local public school districts rarely have complete flexibility to make tradeoffs.[xxxii]Class size reduction may be constrained by available classrooms. Smaller class sizes and reduced total student loads are a relevant working condition simultaneously influencing teacher recruitment and retention.[xxxiii]That is, providing smaller classes may partly offset the need for higher wages for recruiting or retaining teachers. High poverty schools require a both/and rather than either/or strategy when it comes to smaller classes and competitive wages.

As discussed above, achieving equal educational opportunity requires leveraging additional real resources, lower class sizes and more intensive support services, in high need settings. Merely achieving equal qualities of real resources, including equally qualified teachers, likely requires higher competitive wages, not merely equal pay in a given labor market. As such, higher need settings may require substantially greater financial inputs than lower need settings. Lacking sufficient financial inputs to do both, districts must choose one or the other. In some cases, higher need districts may lack sufficient resources to do either.


[i]Card, D., and Payne, A. A. (2002). School Finance Reform, the Distribution of School Spending, and the Distribution of Student Test Scores. Journal of Public Economics, 83(1), 49-82.

[ii]Jackson, C. K., Johnson, R., & Persico, C. (2014). The Effect of School Finance Reforms on the Distribution of Spending, Academic Achievement, and Adult Outcomes (No. w20118). National Bureau of Economic Research.

Jackson, C. K., Johnson, R., & Persico, C. (2015). The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms (No. w 20847) National Bureau of Economic Research.

[iii]Figlio, D. N. (2004) Funding and Accountability: Some Conceptual and Technical Issues in State Aid Reform. In Yinger, J. (Ed.) p. 87-111 Helping Children Left Behind: State Aid and the Pursuit of Educational Equity. MIT Press.

[iv]Roy, J. (2011). Impact of school finance reform on resource equalization and academic performance: Evidence from Michigan. Education Finance and Policy, 6(2), 137-167.

Roy (2011) published an analysis of the effects of Michigan’s 1990s school finance reforms which led to a significant leveling up for previously low-spending districts. Roy, whose analyses measure both whether the policy resulted in changes in funding and who was affected, found that “Proposal A was quite successful in reducing interdistrict spending disparities. There was also a significant positive effect on student performance in the lowest-spending districts as measured in state tests.” (p. 137)

[v]Papke, L. (2005). The effects of spending on test pass rates: evidence from Michigan. Journal of Public Economics, 89(5-6). 821-839.

Hyman, J. (2013). Does Money Matter in the Long Run? Effects of School Spending on Educational Attainment.

Papke (2001), also evaluating Michigan school finance reforms from the 1990s, found that “increases in spending have nontrivial, statistically significant effects on math test pass rates, and the effects are largest for schools with initially poor performance.” (p. 821)

Most recently, Hyman (2013) also found positive effects of Michigan school finance reforms in the 1990s, but raised some concerns regarding the distribution of those effects. Hyman found that much of the increase was targeted to schools serving fewer low income children. But, the study did find that students exposed to an additional “12%, more spending per year during grades four through seven experienced a 3.9 percentage point increase in the probability of enrolling in college, and a 2.5 percentage point increase in the probability of earning a degree.” (p. 1)

[vi]Deke, J. (2003). A study of the impact of public school spending on postsecondary educational attainment using statewide school district refinancing in Kansas, Economics of Education Review, 22(3), 275-284. (p. 275)

[vii]Downes, T. A., Zabel, J., and Ansel, D. (2009). Incomplete Grade: Massachusetts Education Reform at 15. Boston, MA. MassINC.

[viii]Guryan, J. (2001). Does Money Matter? Estimates from Education Finance Reform in Massachusetts. Working Paper No. 8269. Cambridge, MA: National Bureau of Economic Research.

“The magnitudes imply a $1,000 increase in per-pupil spending leads to about a third to a half of a standard-deviation increase in average test scores. It is noted that the state aid driving the estimates is targeted to under-funded school districts, which may have atypical returns to additional expenditures.” (p. 1)

[ix]Nguyen-Hoang, P., & Yinger, J. (2014). Education Finance Reform, Local Behavior, and Student Performance in Massachusetts. Journal of Education Finance, 39(4), 297-322.

[x]Downes had conducted earlier studies of Vermont school finance reforms in the late 1990s (Act 60). In a 2004 book chapter, Downes noted “All of the evidence cited in this paper supports the conclusion that Act 60 has dramatically reduced dispersion in education spending and has done this by weakening the link between spending and property wealth. Further, the regressions presented in this paper offer some evidence that student performance has become more equal in the post-Act 60 period. And no results support the conclusion that Act 60 has contributed to increased dispersion in performance.” (p. 312)

Downes, T. A. (2004). School Finance Reform and School Quality: Lessons from Vermont. In Yinger, J. (Ed.), Helping Children Left Behind: State Aid and the Pursuit of Educational Equity. Cambridge, MA: MIT Press.

[xi]Konstantopolous, S., Borman, G. (2011) Family Background and School Effects on Student Achievement: A Multilevel Analysis of the Coleman Data. Teachers College Record. 113 (1) 97-132

Borman, G.D., Dowling, M. (2010) Schools and Inequality: A Multilevel Analysis of Coleman’s Equality of Educational Opportunity Data. Teachers College Record. 112 (5) 1201-1246

[xii]Hanushek, E.A. (1986) Economics of Schooling: Production and Efficiency in Public Schools. Journal of Economic Literature 24 (3) 1141-1177. A few years later, Hanushek paraphrased this conclusion in another widely cited article as “Variations in school expenditures are not systematically related to variations in student performance”

Hanushek, E.A. (1989) The impact of differential expenditures on school performance. Educational Researcher. 18 (4) 45-62

Hanushek describes the collection of studies relating spending and outcomes as follows:

“The studies are almost evenly divided between studies of individual student performance and aggregate performance in schools or districts. Ninety-six of the 147 studies measure output by score on some standardized test. Approximately 40 percent are based upon variations in performance within single districts while the remainder look across districts. Three-fifths look at secondary performance (grades 7-12) with the rest concentrating on elementary student performance.” (fn #25)

[xiii]Baker, B. D. (2012). Revisiting the Age-Old Question: Does Money Matter in Education?. Albert Shanker Institute.

Relevant re-analyses include:

Greenwald, R., Hedges, L., Laine, R. (1996) The Effect of School Resources on Student Achievement. Review of Educational Research 66 (3) 361-396

Wenglinsky, H. (1997) How Money Matters: The effect of school district spending on academic achievement. Sociology of Education 70 (3) 221-237

[xiv]Hanushek (2006) goes so far as to title a concurrently produced volume on the same topic “How School Finance Lawsuits Exploit Judges’ Good Intentions and Harm Our Children.” [emphasis added] The premise that additional funding for schools often leveraged toward class size reduction, additional course offerings or increased teacher salaries, causes harm to children is, on its face, absurd. The book which implies as much in its title never once validates that such reforms ever cause observable harm. Rather, the title is little more than a manipulative attempt to instill fear of pending harm in mind of the un-critical spectator. The book also includes two examples of a type of analysis that occurred with some frequency in the mid-2000s which also had the intent of showing that school funding doesn’t matter. These studies would cherry pick anecdotal information on either or both a) poorly funded schools that have high outcomes or b) well-funded schools that have low outcomes (see Evers & Clopton, 2006, Walberg, 2006).

[xv]Baker, B. D., & Welner, K. G. (2011). School finance and courts: Does reform matter, and how can we tell. Teachers College Record, 113(11), 2374-2414.

Hanushek, E. A., and Lindseth, A. (2009). Schoolhouses, Courthouses and Statehouses. Princeton, N.J.: Princeton University Press., See also:

Hanushek, E. A. (ed.). (2006). Courting failure: How school finance lawsuits exploit judges’ good intentions and harm our children (No. 551). Hoover Press.

Evers, W. M., and Clopton, P. (2006). “High-Spending, Low-Performing School Districts,” in Courting Failure: How School Finance Lawsuits Exploit Judges’ Good Intentions and Harm our Children (Eric A. Hanushek, ed.) (pp. 103-194). Palo Alto, CA: Hoover Press.

Walberg, H. (2006) High Poverty, High Performance Schools, Districts and States. in Courting Failure: How School Finance Lawsuits Exploit Judges’ Good Intentions and Harm our Children (Eric A. Hanushek, ed.) (pp. 79-102). Palo Alto, CA: Hoover Press.

Hanushek, E. A., and Lindseth, A. (2009). Schoolhouses, Courthouses and Statehouses. Princeton, N.J.: Princeton University Press., See also:

[xvi]Greene, J. P. & Trivitt, (2008). Can Judges Improve Academic Achievement? Peabody Journal of Education, 83(2), 224-237.

Neymotin, F. (2010) The Relationship between School Funding and Student Achievement in Kansas Public Schools. Journal of Education Finance 36 (1) 88-108.

[xvii]Baker, B. D., & Welner, K. G. (2011). School finance and courts: Does reform matter, and how can we tell. Teachers College Record, 113(11), 2374-2414.

[xviii]Baker, B. D., & Welner, K. G. (2011). School finance and courts: Does reform matter, and how can we tell. Teachers College Record, 113(11), 2374-2414.

Two reports from Cato Institute are illustrative (Ciotti, 1998, Coate & VanDerHoff, 1999).

Ciotti, P. (1998). Money and School Performance: Lessons from the Kansas City Desegregations Experience. Cato Policy Analysis #298.

Coate, D. & VanDerHoff, J. (1999). Public School Spending and Student Achievement: The Case of New Jersey. Cato Journal, 19(1), 85-99.

[xix]Richard J. Murnane and Randall Olsen (1989) The effects of salaries and opportunity costs on length of state in teaching. Evidence from Michigan. Review of Economics and Statistics 71 (2) 347-352

[xx]David N. Figlio (2002) Can Public Schools Buy Better-Qualified Teachers?” Industrial and Labor Relations Review 55, 686-699. David N. Figlio (1997) Teacher Salaries and Teacher Quality. Economics Letters 55 267-271. Ronald Ferguson (1991) Paying for Public Education: New Evidence on How and Why Money Matters. Harvard Journal on Legislation. 28 (2) 465-498.

[xxi]Loeb, S., Page, M. (2000) Examining the Link Between Teacher Wages and Student Outcomes: The Importance of Alternative Labor Market Opportunities and Non-Pecuniary Variation. Review of Economics and Statistics 82 (3) 393-408

[xxii]Figlio, D.N., Rueben, K. (2001) Tax Limits and the Qualifications of New Teachers. Journal of Public Economics. April, 49-71

See also:

Downes, T. A. Figlio, D. N. (1999) Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality52 (1) 113-128

[xxiii]Ondrich, J., Pas, E., Yinger, J. (2008) The Determinants of Teacher Attrition in Upstate New York. Public Finance Review 36 (1) 112-144

[xxiv]Hanushek, E. A. (2011). The economic value of higher teacher quality. Economics of Education Review, 30(3), 466-479.

[xxv]Hanushek, E. A. (2009). Teacher deselection. Creating a new teaching profession, 168, 172-173.

[xxvi]Springer, M. G., Ballou, D., Hamilton, L., Le, V. N., Lockwood, J. R., McCaffrey, D. F., … & Stecher, B. M. (2011). Teacher Pay for Performance: Experimental Evidence from the Project on Incentives in Teaching (POINT). Society for Research on Educational Effectiveness.

Yuan, K., Le, V. N., McCaffrey, D. F., Marsh, J. A., Hamilton, L. S., Stecher, B. M., & Springer, M. G. (2012). Incentive Pay Programs Do Not Affect Teacher Motivation or Reported Practices Results From Three Randomized Studies. Educational Evaluation and Policy Analysis, 0162373712462625.

Goodman, S. F., & Turner, L. J. (2013). The design of teacher incentive pay and educational outcomes: Evidence from the New York City bonus program. Journal of Labor Economics, 31(2), 409-420.

Goodman, S., & Turner, L. (2011). Does Whole-School Performance Pay Improve Student Learning? Evidence from the New York City Schools. Education Next, 11(2), 67-71.

[xxvii]Baker, B. D., Oluwole, J. O., & Green III, P. C. (2013). The Legal Consequences of Mandating High Stakes Decisions Based on Low Quality Information: Teacher Evaluation in the Race-to-the-Top Era. education policy analysis archives, 21(5), n5.

[xxviii]Baker, B. D., Oluwole, J. O., & Green III, P. C. (2013). The Legal Consequences of Mandating High Stakes Decisions Based on Low Quality Information: Teacher Evaluation in the Race-to-the-Top Era. education policy analysis archives, 21(5), n5.


Jeremy D. Finn and Charles M. Achilles, “Tennessee’s Class Size Study: Findings, Implications, Misconceptions,” Educational Evaluation and Policy Analysis, 21, no. 2 (Summer 2009): 97-109;

Jeremy Finn et. al, “The Enduring Effects of Small Classes,” Teachers College Record, 103, no. 2, (April 2001): 145–183;;

Alan Krueger, “Would Smaller Class Sizes Help Close the Black-White Achievement Gap.” Working Paper #451 (Princeton, NJ: Industrial Relations Section, Department of Economics, Princeton University, 2001);

Henry M. Levin, “The Public Returns to Public Educational Investments in African American Males,” Dijon Conference, University of Bourgogne, France. May 2006.;

Spyros Konstantopoulos Spyros and Vicki Chun, “What Are the Long-Term Effects of Small Classes on the Achievement Gap? Evidence from the Lasting Benefits Study,” American Journal of Education 116, no. 1 (November 2009): 125-154.

[xxx]Jepsen, C., Rivkin, S. (2002) What is the Tradeoff Between Smaller Classes and Teacher Quality? NBER Working Paper # 9205, Cambridge, MA.

“The results show that, all else equal, smaller classes raise third-grade mathematics and reading achievement, particularly for lower-income students. However, the expansion of the teaching force required to staff the additional classrooms appears to have led to a deterioration in average teacher quality in schools serving a predominantly black student body. This deterioration partially or, in some cases, fully offset the benefits of smaller classes, demonstrating the importance of considering all implications of any policy change.” p. 1

For further discussion of the complexities of evaluating class size reduction in a dynamic policy context, see:

David Sims, “A Strategic Response to Class Size Reduction: Combination Classes and Student Achievement in California,” Journal of Policy Analysis and Management, 27(3) (2008): 457–478

David Sims, “Crowding Peter to Educate Paul: Lessons from a Class Size Reduction Externality,” Economics of Education Review, 28 (2009): 465–473.

Matthew M. Chingos, “The Impact of a Universal Class-Size Reduction Policy: Evidence from Florida’s Statewide Mandate,” Program on Education Policy and Governance Working Paper 10-03 (2010).

[xxxi]Ehrenberg, R.G., Brewer, D., Gamoran, A., Willms, J.D. (2001) Class Size and Student Achievement. Psychological Science in the Public Interest 2 (1) 1-30

[xxxii]Baker, B., & Welner, K. G. (2012). Evidence and rigor scrutinizing the rhetorical embrace of evidence-based decision making. Educational Researcher, 41(3), 98-101.

[xxxiii]Loeb, S., Darling-Hammond, L., & Luczak, J. (2005). How teaching conditions predict teacher turnover in California schools. Peabody Journal of Education, 80(3), 44-70.

Isenberg, E. P. (2010). The Effect of Class Size on Teacher Attrition: Evidence from Class Size Reduction Policies in New York State. US Census Bureau Center for Economic Studies Paper No. CES-WP-10-05.

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Bruce D. Baker

Bruce Baker is Professor and Chair of the Department of Teaching and Learning at the University of Miami. Professor Baker is widely recognized as the nation’s lea...